Facts of the Case

The Ramanathapuram Marketing Committee invited tenders for allotment of shops in its commercial complex on rental basis. The petitioner, Senkiskhan, submitted the highest bid of Rs.61,000/- for Shop No.7 situated on the ground floor.

Despite being the highest bidder, the authorities rejected his tender application and allotted the shop to the third respondent, whose bid was Rs.60,000/-.

The rejection was based on the allegation that the petitioner had not enclosed proof showing Nil GST dues as on March 2022, though the petitioner asserted that he had submitted his GST Registration Certificate along with monthly GST returns (Form GSTR-3B) from April 2021 to March 2022.

Aggrieved by the rejection and subsequent allotment, the petitioner approached the Madras High Court seeking quashing of the allotment and direction to allot the shop in his favour.

Issues Involved

  1. Whether the tender authority was justified in rejecting the petitioner's bid on the ground that proof of Nil GST dues was not enclosed.
  2. Whether the highest bidder could be denied allotment without establishing that the required documents were actually absent.
  3. Whether the Court could invoke Section 114 of the Indian Evidence Act to presume that the petitioner had submitted the necessary documents.
  4. Whether allotment made in favour of the third respondent was legally sustainable.

Petitioner's Arguments

The petitioner contended that:

  • He was the highest bidder for Shop No.7.
  • He had enclosed all mandatory documents, including:
    • GST Registration Certificate.
    • Twelve monthly GST Returns (GSTR-3B) from April 2021 to March 2022.
  • The rejection order was arbitrary and contrary to facts.
  • The authorities neither informed him during scrutiny about any deficiency nor obtained his acknowledgment regarding any missing documents.
  • The rejection order itself was never communicated to him.
  • Since he fulfilled all eligibility conditions, the allotment in favour of the third respondent deserved to be quashed. 

Respondents' Arguments

The respondents submitted that:

  • Tender conditions specifically required applicants to submit:
    • GST Registration Details.
    • Proof of carrying on business for at least one year during the preceding three years.
    • Proof showing Nil GST dues.
  • According to the authorities, the petitioner failed to furnish proof regarding Nil GST dues.
  • The tender conditions were introduced to ensure that only genuine and experienced businessmen obtained shop allotments.
  • Since the petitioner participated in the tender process after accepting the conditions, he could not subsequently question their validity.
  • Therefore, rejection of the petitioner's application was justified.

Court Order / Findings

The Madras High Court allowed the writ petition and made the following important observations:

  • The validity of the tender conditions was not under challenge.
  • The only issue was whether the petitioner had actually enclosed proof regarding Nil GST dues.
  • The rejection order itself acknowledged that the petitioner had submitted GST details.
  • The petitioner consistently asserted that all GST returns had been enclosed.
  • The authorities failed to produce convincing material showing that the documents were absent.
  • No counter affidavit effectively disproved the petitioner's claim.
  • The authorities did not:
    • Videograph the tender scrutiny process.
    • Obtain the petitioner's signature indicating any missing document.
    • Inform the petitioner immediately regarding rejection.
  • Such procedural lapses weakened the respondents' case.
  • Applying Section 114 of the Indian Evidence Act, the Court presumed that the petitioner had indeed enclosed the relevant GST documents.
  • Since the petitioner quoted the highest rent (Rs.61,000/-), rejection of his bid was held to be unjustified.
  • The allotment made in favour of the third respondent was set aside.
  • The Marketing Committee was directed to allot Shop No.7 to the petitioner.

Important Clarification

This judgment reiterates that:

  • Tender authorities must act with complete transparency while scrutinising bid documents.
  • Mere allegation of non-submission of documents is insufficient unless supported by proper records.
  • Authorities should immediately notify bidders regarding deficiencies during scrutiny.
  • Failure to maintain procedural fairness may lead the Court to draw adverse presumptions under Section 114 of the Indian Evidence Act.
  • A highest bidder cannot be arbitrarily denied allotment without reliable evidence establishing non-compliance. 

Sections / Provisions Involved

  • Article 226 of the Constitution of India
  • Section 114 of the Indian Evidence Act, 1872
  • Tender Conditions relating to GST Registration, GST Returns and Eligibility Criteria for Shop Allotment.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1782895183_107compressed.pdf

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